More — Who Needs Capitalists?

Friendly fire is the worst

Also, some “fake MMT,” or getting near it.

How to not name names? I give up! An anonymous account “Keynes” posted a few comments on Interest.co.nz, pointing out a few MMT truths. Which was good. However, this led my brother to ask who this person might be. I suggested it might be friend-of-MMT, the Re-Learning Economics guy. But I cannot be sure. Anyhow, this led to some duckduckgo search and raised some eyebrows. For Ty is still apparently on the Dark Side with his boosting of UBI and his anti-MMT stance on trade and whatnot. But you can judge for yourself.

Quickly on that Issue: UBI is a regressive policy, a claim the State makes on someone else’s labour. Ty’s Minksy models might show some benefit of a UBI, and that will be because he is using macro models. These are utterly devoid of morality. It is GIGO. Ironic, since he and ProfKeen are so fond of claiming the mainstream DSGE models are GIGO. In the macro pretty much any add to effective demand will look good for “The Economy” in a macro model. But that means ꕷꖾꔇꖡꗍ if absent a moral & ethical analysis. Jobs for Killing People sort of stuff. There is no equivalence with the Job Guarantee here, because the State has the option to not dictate what you can do, but specify what work cannot be compensated (such as Arson-for-Fun jobs and Sitting-on-My-ꗇꕷꕷ-and-watching-Twitch-stream-with-pizza-and-coke jobs). Oooo!!!… sound too “authoritarian” for you?🤣 If we desire community activists on a JG compensation, we can have them. For sure, an authoritarian government will strike those off the JG schedule, but so what? In that case we are no worse off than now. Besides, my gut feeling is whatever government implements a decent JG will be a government that lasts pretty much forever without neoliberals or authoritarians ever getting a sniff of power ever again. Define “decent” as you please, it is hard to go wrong.

Same for the Ai grift stuff. Which is a “Productivity Gain” story. This is a correct story. But it means 𝖘🅷🅈𝒕𝑒 if absent a moral and ethical analysis. (The Ai techbro grift and hype will be a topic for another day, coming soon. It seems there is always a need for a fresh bit of writing on that topic. Repetition of the (anti-)Nerd-Reich messaging here being the moral imperative.)

The Trade Story

In Dirtbag MMT fashion, allow me to make a Strawman, deliberately, to kick it down. It is Mr Tryone Yeknes. Mr Yeknes claims MMT is dopey, because MMT thinks “Exports are a Real Cost and Imports are a Real Benefit”. He has an ad hominen attack that these MMT’ers are like a Cult of Mosler. This is cruel and disingenuous.

It is not a point of debate. Imports are a real benefit. Exports are your nation giving real goods to foreigners, so from your nation’s perspective they are a real cost. This is just definitional. There is no debate about it.

What ProfKeen and Yeknes think is that there are other side-effects which should not be ignored. Which is true. But the problem is this is at total cross-purposes to MMT. MMT activists are trying their best to point out how things could be, not merely how things are. It is why MMT is a highly Activist oriented framework, and not boring technocracy and nerd-bro model building. MMT is pure activism for our generation, because the governments are not demonstrating they understand MMT. MMT is the reality. The rules of the system. But policy makers are not showing they know these rules.

Under such Idiocracy then of course government responses to trade current account deficit = capital account surplus (receiving more goods than you give) is going to risk downstream being regressive and backwards. (See Mosler’s recent open letter to Canadian PM Mark Carney.)

There should then be no friction between ProfKeen and Mosler, nor between myself and other MMT activists and Mr Yeknes. So why is there friction? I think it is mainly cross-talk, cross-purposes. MMT’ers are not fine with current government policy! Government policy responses are what make the imports look like a real cost in some ways. No one is denying this Mr Yeknes! The cause of this (loss) is not the imports themselves though, the cause is the policy response — which is not an automatic market function with any metaphysical necessity. I suspect this is what most other heterodox economists fail to appreciate.

The MMT activist point is that this is all needless.

I only have the oxygen today to address two points Yeknes makes.

1. (Claim:) Imports reduce the money supply, which is not to our benefit. This is false, but poor government policy response can make it quasi-statically true, if we ignore dynamics. If Yeknes runs a Minksy macro model he can surely show the dynamical response is not beneficial to the domestic economy, but in running a model he is presuming some policy response, whether he admits it or not.

2. (Claim:) Yeknes, or a Patreon of his, claimed MMT’ers “get trade wrong” because they fail to appreciate the US dollar is a “global reserve currency.” This is false, and hardly worth debating, but I will have a few words below. It is however, once again, the government policy response that is at fault, not the MMT activist message.

A side note: Yeknes also disingenuously accuses MMT’ers of “behaving like neoclassicals.” That’s a nasty punch below the belt. What the MMT crowd tend to do is FIRST understand the monetary system, hence the source of unemployment and the source of the price level. Then SECOND we show how the neoclassicals were in fact correct (morally) to ignore money. Because it is the real goods that really matter. Not the accounting entries. You cannot eat a dollar bill. Money is the least important thing, it is just records of credit and debit. Even David Graeber understood this.

Where MMT’ers are the polar opposite of Neoclassicals is that we recognize why money should be the least important thing in the world. Neoclassicals do not. And this is all the difference in the world. None of us MMT activists will ever say present day people in governments know this! They do not! So the monetary operations take on an incredibly gross disproportionate significance in our lives. For no good reason!

One gets the impression Mr Yeknes is a kind of Libertarian who does not see government policy as a vital reason why the dynamics in the monetary system gets screwed up. But if you go back to around 2014—2017 (I forget when exactly) when Mosler and Keen had a little debate hosted by Steve Grumbine, you might find how they both (nearly) agree. ProfKeen was saying governments are stupid — a Libertarian-lite sort of attitude, since it was essentializing governments as bad. I wouldn’t want to claim such ills of all governments, especially not in the face of Mia Amor Mottley from Barbados. Mosler was saying regardless of whether governments are stupid or not, imports are still your real benefit and exports your real cost. He is right about that. It is not “neoclassical thinking,” it is use of accurate definitions.

Just because a government is an Idiocracy does not imply logically that their policy response will be to turn a win (net imports) into a loss (austerity and joblessness and thus higher welfare spending). They may, or they may not. For example, with Trump and DOGE you might get joblessness, but without the increase in welfare payments. So a double whammy. You cannot really say which will occur though. Especially not with far-right governments being so chaotic. Best you can say is that there might be a statistical bias towards turning accounting entries indicating net imports (always a win) into bad policy response (so could be a net loss overall). However, it is not the imports causing the loss! If you run your Minsky dynamics model, you have chosen the government policy response. But I can run the same model and choose a different response, with the opposite outcomes.

In both cases, the MMT message is to stop making the incorrect policy responses. Then imports will be a real benefit. By definition, not opinion.

Global Reserve Raisins?

The US dollar is not a global reserve currency. Even under Bretton-Woods it was not. Everyone spoke as if it was a global reserve $ system, but that was all false consciousness. Bretton-Woods did not imply a nation had to use the US dollar to guarantee full employment. The USD was then acting only as a numeriare. Little tiny young New Zealand, for example, could still have guaranteed full employment and run massive NZ$ gov-deficits, i.e., increased nominal private sector wealth in NZD. Without strong exports we may have then “suffered’ massive inflation rates, like double digits. But that is still of no purely financial economic consequence, since the NZD was still a gauge system.

It is astounding people still speak of the USD as a global reserve currency. ꘘꘘꕷ people! Stop it! Even our highly credentialed imbeciles at the RBNZ know they do not hold US$ as the reserve balances (exchange settlement balance accounts) — if not, why are they not in touch with their own operations staff? People hold US Treasury securities really for no reason than to earn the interest. No one holds them in order to clear payments. Go ahead, fact-check me on this!

How you gauge is the political psychology problem. Rich ℭ𝔘𝔑𝔗𝔰 and export oligarchs might beg your government to gauge against gold or a foreign currency, it suits their purposes, to enrich themselves in relative terms to your workers. If you operate like Bretton-Woods and gauge against the US dollar, you are just a bit retarded, because you will find it hard to avoid inflation, which is a political psychology problem, it gets you voted out of office. (I stipulate “a bit retarded” since this is what you want from a Tory or neolib, to get voted out of office.) To offset you might need to promote domestic unemployment to reduce domestic demand. Which would be highly regressive, and needless, if not for the false psychology. In the end, you’d hopefully realize using the USD as your gauge is a definition of Idiocracy, so you’d stop doing it (one may hope).

The Cult of 🆃🅴🅲🅷🅽🅾🅻🅾🅶🆈

There is another thing I find incredibly sad about Prof Keen. He is great on debunking climate change deniers. But he can be just as bad. There is something seriously wrong in the brain or mind, or both, of people who used to think The Mars King was a savior with all his EV’s and was some kind of effective altruist (orwellian dude!). Bruh! He was never that! Not for one damn second. I thought this was plain to see from day One when his name became prominent.

There is something wrong with the brain or mind of people who think we just need to fire up the rockets and go mine the asteroids, so we can get the minerals to build more solar energy arrays on Earth. No. Dude. We can do so much more by just cutting out all the crud that goes by the name of “Capitalism”.

Besides which, you cannot escape the Second Law of Thermodynamics considering the Earth as a closed system. If we get all the solar arrays we want, they still dump out waste heat. To avoid cooking the planet all that heat has to be radiated into outer space. Which heats up the upper atmosphere. You see the problem? At some point the Accelerationism cooks us anyway, even if GHG’s are kept to a minimum. OK, this could help push the tipping points hundreds of years into the future, but still, I think maybe this helps make the point that technology is not really the great savior.

Carbon capture all you can, it’s good. Who doesn’t want some stored carbon? Otherwise known as children and trees. But you have to ask why work so hard? It’s like the capitalist mode is Sisyphus jamming in a wedge temporarily then running up the hill to pile more crap on it to make it higher since he risks running out of hill.

Capitalists will always find ways to pump out more pollution, if there is no downside for their selfish greedy little bodies and minds.

There is so much mindless pursuit of profit that we just do not need. I think if we really understood how much stuff we produce that we do not need people would be in shock. I’m thinking (wild guess) 80% of energy consumption is utterly non-essential.

Ex. With public employment teaching people nearly-useless (but not quite🤣) mathematics at low cost (pencil and paper), I’d not have to waste CPU cycles writing this substack for zero income, for one thing!

What does that translate to for you in your work day? I used to work about 16 hours a day. Probably it was useless fun (theoretical physics). But suppose not. Then what I’m saying is that “on average” in the macro 12 hours a day was stupid, and you could have produced enough useful output in 3 hours, or just worked hard for one day a week. (Wage rate adjusted of course to real living standard terms. Always.) Without aid of an energy chewing LLM bot.

In which case, we can do with far fewer solar arrays and geothermal wells than you think.

Also, I’ve seen ProfKeen put out videos that ostensibly appear to be appealing to the Mars King to try to understand MMT… since The Mars King is a lovely “beautiful mind” engineer bro, so all he needs is a bit of expert domain gap filling. Right? (I’m inventing that story, since I cannot stomach actually watching those videos. So please take this as another deliberate Strawman.)

Anyhow. How wrong can you be Mr Strawman! It is so politically naïve it makes me almost cry. It only takes a squeak of DuckDuckGo to see The Mars King completely “groks” (haha!) MMT, and knows the Federal government cannot ever run out of US$. So there is no sense in appealing to this guy as some “smart engineer who just lacks domain knowledge.” The dude is a white supremacist, misogynist, and a Shogun level class warrior. Even if he did not understand MMT, he would not want to, but it was too late, he already figured out MMT. So the fact his DOGE chainsaw massacre kiddie-coder-nerds are (or were?) in operation just tells you he will do absolutely not one ounce of good with any knowledge he possesses, except maybe boost ketamine sales. Good biz for the Veterinarians.

International Trade

So far the MMT story I have presented is parochial. The more important issue is that maybe some powerful and resource-rich nations should net export, to aid the less resource-rich nations? Sounds good huh?

Yeah, but we’ve already got that, and it does not work. It is called neocolonialism. Plenty of incredibly rich African nations are behaving totally generously toward the EU and USA, giving away a whole lot of their stuff in return for US or euro Treasury securities, which their people cannot eat.

I see the United Nations being the institution that needs to drastically mature here, starting with abolishing the Security Council veto powers. An actual global reserve currency (a payments clearing system run by the UN) should be put in place¹, so that resource-wealthy but institutionally impoverished nations can enjoy their own domestic output,² but also receive vital imports needed for modernization and sustainable energy production. That is mainly a technology patent issue, not a monetary system issue.

Remember, the money (accounting records) need to become the least important thing. The point of a UN payments layer would be to buffer inflation pressures so socially weak governments can operate politically stable, and become more social, without the voters getting attacks of hyperinflation bogeyman hysterics.

---

Maybe a valid criticism of MMT activists is that they are too rosy-eyed, and believe people in government can learn stuff. In that case, I am guilty.

1. The purpose is not to hand out money, but to prevent militaristic nations using shipping sanctions and trade blockades. It would be something like illegal to refuse to fulfill a UN currency payment clearing transaction, with massive consequences for the firm unwilling to ship. I do not see this UN payments system being particularly huge. A bit like the Job Guarantee, it could be relatively small.

2. For the same reason, the DOGE chainsaw massacre guys slicing away USAID was entirely inconsequential. Or should have been inconsequential. Instead perhaps thousands are starving as a result. For no good reason, but it was not the fault of the DOGE chainsaws, as evil as those fiscal ax murdering Eugene nerds were. So-called “progressives” have raised a right stink about it though, it’s in every other Devex newsletter. They fail to realize the US$ was never needed. What the nations receiving the USAID gunk needed was the real goods and medicines, and that could have been paid for in the currency of the nation where those people reside. Always and without question. It would fund their “tax payers.” That’s what you call a win–win in game theory I believe.